Will the acquisition of Whole Foods by Amazon mean more competition or coopetition?

Note: While SmallBusiness.com rarely covers news about mergers or acquisitions that involve large publicly-traded companies, we often cover the actions of Amazon as it both competes with, and serves as a marketplace of goods and services for small business.

In a press release today (6/16/2016), Amazon announced it is acquiring the food store chain Whole Foods. While Amazon has already transitioned to same-day delivery in many markets and is experimenting with various forms of food-related retailing, an obvious question about the merger is what it might mean for small and local food merchants.

Early small business observations regarding Amazon’s acquisition of Whole Foods

Amazon will be focused on adding efficiencies to a large company that needs their muscle. Amazon won’t be focused on small, niche stores, except in ways that will likely enhance the logistics and delivery capabilities of Whole Foods-branded stores.

Whole Foods’ commitment to local sourcing won’t change

The Whole Foods brand has become synonymous with natural, sustainable and locally sourced food (and with being expensive). Amazon is not a food company (nor a book company). Amazon is a technology and logistics company. As local sourcing of food is front and center with Whole Foods’ marketing efforts, a large part of its value would disappear if Amazon attempted to re-make it. Starting with IMDB (its first acquisition) through Zappos, you’ll find few attempts by Amazon to instantly attempt to re-make brands and cultures that work.

We’ve grappled before with the question, “Is Amazon a friend of foe of small business?” And the answer is always, “yes.” If ever there was an example of the concept of “coopetition” (when two or more companies compete in some ways, but cooperate in others), Amazon and small businesses are it.

On SmallBusiness.com, we’ve observed that when it comes to certain retail niches, Amazon fiercely competes with small businesses. While in other ways (small, independent, niche bookstores, for example), it can be easily argued that Amazon’s war with big-box retailers like Barnes and Noble, created an opportunity for local bookstores. No doubt, the same is taking place with Amazon’s current battle with Walmart (and Sam’s), but Walmart won’t be as flat-footed as Barnes & Noble.

According to the company, Amazon provides small businesses access to more than 300 million active customer accounts worldwide through its various programs to allow small businesses to set up shop or use Amazon’s fulfillment service. And millions of businesses, large and small, use Amazon’s vast web services.

Bottom line

It is almost impossible to list all of the ways Amazon intersects with all small businesses— sometimes competing, other times cooperating. Some businesses would not exist today if Amazon’s distribution and fulfillment services didn’t exist. Amazon’s affiliate programs have been a first-step to e-commerce for others. However, Amazon has fought local sales tax laws in all 50 states, an action most bricks and mortar stores know give Amazon an unfair advantage in the sale of certain types of goods.

But it’s important to recognize opportunities among Amazon’s strategies.